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Andrew Barr on why borrowing is good.

Treasurer Andrew Barr is making the case for some borrowing to build the city of tomorrow.

Further, with the Commonwealth continuing its contraction the ACT Government’s contribution to the Territory’s economic growth will take on greater significance. Spending on large-scale infrastructure projects will therefore be a big boost to economic and jobs growth in Canberra.

Canberrans of the future will no doubt want a city with quality infrastructure and services. But providing this requires the foresight to take the long-term decisions to build the Canberra of tomorrow, and of 2033 and 2053. This requires the courage to think ahead and commit to building and funding important transformational projects.

So ACT Government to the rescue again ! And for which transformation projects is Mr Barr softening us up. Based on the performance of this local government, the sceptic in me really wonders whether the minister isn’t just beating the air.

According to a report in todays Canberra Times (SMH Canberrra edition) Barr has increased some property taxes threefold in his visionary budget.
Now, didn’t someone warn that Labor would triple rates?

Rates and land tax are two separate things, the latter affecting landlords, apartment investors in this case to bring them more into line with house investors.

This will just focus investors’ attention on houses. Is that really what we want?

Canberrans of the future will no doubt want a city with quality infrastructure and services.

What’s the point in providing “quality” (ha!) infrastructure when it only services ~20% of Canberra?

Everyone gets slugged with Barr’s budget but only a select few see the benefit. I think if we keep heading the way we are, Mr Barr and out wonderful Chief Minister are going to see the roads out of Canberra getting a lot more use…. (if you get my drift)

So ACT Government to the rescue again ! And for which transformation projects is Mr Barr softening us up. Based on the performance of this local government, the sceptic in me really wonders whether the minister isn’t just beating the air.

According to a report in todays Canberra Times (SMH Canberrra edition) Barr has increased some property taxes threefold in his visionary budget.
Now, didn’t someone warn that Labor would triple rates?

Rates and land tax are two separate things, the latter affecting landlords, apartment investors in this case to bring them more into line with house investors.

So ACT Government to the rescue again ! And for which transformation projects is Mr Barr softening us up. Based on the performance of this local government, the sceptic in me really wonders whether the minister isn’t just beating the air.

According to a report in todays Canberra Times (SMH Canberrra edition) Barr has increased some property taxes threefold in his visionary budget.
Now, didn’t someone warn that Labor would triple rates?

So ACT Government to the rescue again ! And for which transformation projects is Mr Barr softening us up. Based on the performance of this local government, the sceptic in me really wonders whether the minister isn’t just beating the air.

Andrew Barr is right to consider borrowing to fund infrastructure but he should not use traditional collateral of ACT assets to secure the borrowing. Rather he should use the income to be generated from the infrastructure (taxes) as collateral and he should borrow from the citizens of Canberra (their super funds) and pay fixed interest on inflation adjusted bonds.

The only problem is we’re starting from a point where we have more debt than we should. With good economic management a government runs surpluses in the good times and deficits in the bad times. All the years from 2001-2011 were good times for the ACT. After their initial cuts to the public sector, the Howard government increased spending significantly. Labor continued that trend until they started running out of money in 2012. With the good times the ACT had for the first 10 years of the local Labor Green government we should have significant sums of money in the bank, allowing us to engage in some well targeted and effective stimulus through the next couple of years without borrowing. However, as seems to be the way with Labor government, even when they get record revenues they spend more than they receive so we already have significant ACT government debt, meaning the choices some future government will have to make will be even harder.

Indeed. It’s not enough that we shift from property transaction taxes to a system of land tax/rent, in order to lock in the boom time revenues (which are apparently insufficient even for recurrent spending), we must also borrow in order to build and develop. Spending up on “quality infrastructure and services” may not seem such a good idea if the resultant tax burden discourages people from living here.

Borrowing for infrastructure is the only sensible thing to do. The Sydney Harbour Bridge would never have been built if the dough hadn’t been borrowed from the Poms. It allows the cost of infrastructure to be spread over a long enough time to be paid for by both present and future generations of people who benefit from it.

Of course borrowing for economically idiotic projects like the monorail tram is financial suicide since it’ll never pay itself off.

Borrowing for infrastructure is the only sensible thing to do. The Sydney Harbour Bridge would never have been built if the dough hadn’t been borrowed from the Poms. It allows the cost of infrastructure to be spread over a long enough time to be paid for by both present and future generations of people who benefit from it.

Of course borrowing for economically idiotic projects like the monorail tram is financial suicide since it’ll never pay itself off.

The only problem is we’re starting from a point where we have more debt than we should. With good economic management a government runs surpluses in the good times and deficits in the bad times. All the years from 2001-2011 were good times for the ACT. After their initial cuts to the public sector, the Howard government increased spending significantly. Labor continued that trend until they started running out of money in 2012. With the good times the ACT had for the first 10 years of the local Labor Green government we should have significant sums of money in the bank, allowing us to engage in some well targeted and effective stimulus through the next couple of years without borrowing. However, as seems to be the way with Labor government, even when they get record revenues they spend more than they receive so we already have significant ACT government debt, meaning the choices some future government will have to make will be even harder.